Natural Gas Faces Correction Amidst last Friday’s Bearish Reversal

Natural Gas Forecast Video for 31.10.23 by Bruce Powers

A retracement continues today in natural gas following Friday’s bearish reversal candle. Natural gas hit a high of 3.64 last week leading to a correction. That trend high completed at 127.2% Fibonacci extension (greater than 100% retracement) of the correction off the October 9 swing high, which is at the top boundary of a marked resistance zone. The retracement began Friday and continued today as natural gas gapped down at the open.

Deeper Retracement Likely

Today’s low was 3.32 at the time of this writing. So far, a 38.2% Fibonacci retracement completed at 3.35. That put silver close to filling the gap from last Friday, which is does at Thursday’s high of 3.28. Given how fast silver is coming down and how quickly the reversal hit last Friday once, it is expected to be filled. Further, the 200-Day EMA is next in line on the downside at 3.175.

Watching 200-Day EMA for Strong Support

The 200-Day line converges with the 61.8% Fibonacci retracement at 3.35. If approached this would be the second test of the 200-Day line as support since natural gas busted above it on October 6. Of course, the first rally above it failed. Therefore, it is expected to provide support on this second attempt leading to a reversal higher. If it does not, and natural gas starts actively trading again below it, the bullish indication from the 200-Day EMA is at risk. The next lower support zone is around the 50-Day EMA at 2.94. A drop below the 200-Day EMA and especially a daily close below it should see natural gas then test the 50-Day line.

Failed Channel Breakout Last Week

Last week’s rally attempted an upside breakout of the rising trend channel that natural gas has been stuck in since the bottom in April. It got above the line last Friday but could not close above it, leading to today’s continuation of the retracement. In addition to the two moving averages noted above, keep an eye on the internal uptrend line for potential support during weakness. If natural gas stays above it during retracements, it is pointing to eventual higher prices.

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